Lockheed Martin is projecting a 2.5% drop in 2021 revenue, due in part to a re-baseline of the F-35 Joint Strike Fighter's production plan.
Along with the impact of reduced F-35 production volume, Lockheed CEO Jim Taiclet said today during the company's third-quarter earnings call that COVID-19 supply chain issues and withdrawal from Afghanistan also contributed to the revenue decline.
The company and the Pentagon agreed to the revised F-35 production plan in September, which lays out aircraft deliveries for the "foreseeable future." The agreement -- which reduces the number of jets Lockheed expected to deliver by 34 between 2020 and 2021 -- calls for 133-139 jets this year, 151-153 in 2022 and 156 in 2023 and thereafter.
Taiclet said the production smoothing plan provides "important visibility well into the future" for the program's stakeholders, including partner countries and foreign military sales customers.
"The program is strong and stable, and we have opportunities ahead of us to add to that strength," he said. "The program has delivered over 700 production aircraft out of a plan of record of over 3,300 jets including all three U.S. services and nine international customers, so far. And we look forward to continuing the successful program for decades to come."
Raytheon CEO Greg Hayes said his company has seen a slight revenue impact from the new production plan. Pratt & Whitney, a Raytheon subsidiary, develops the F135 engine, and Hayes noted that while the new baseline reduces engine deliveries from about 16 a month to about 13, the program is just a small part of the company's larger defense portfolio.
"You're talking about $10 million an engine, so you're going to lose $30 million a month," he said during his company's earnings call today. "So, you may lose $350-$360 million of revenue going forward -- again, out of a defense backlog of $65 billion, it's just not that significant."